Dow reaches 14,000 …again. What will this mean?

by | Feb 2, 2013 | Point and Figure

The Dow reaches 14,000 on Friday, February 1, 2013 for the first time since 2007, and investors wonder what will this mean going forward?

Seeing a headline “Dow reaches 14,000” should not make you dump stocks, or buy stocks either. The Dow is still just a basket of 30 stocks. Shares in 30 companies you may (or may not) own. So your personal Dow may have been setting new highs for weeks.

Certainly the market in the first month of 2013 has been very good, but we could have said the same thing last year. The biggest difference for me in 2013 is the long-term point and figure indicators I use to make decisions about investments are all heading in the same direction.

And that makes a WORLD of difference between last year and this year.
Last year, the longer term point and figure indicators were mixed. That meant a pull-back could be “just a pull-back” or it could be the start of some bigger move down in the markets. As an advisor with a fiduciary obligation, I needed to be certain we were in a position where we could quickly protect, if needed.

The longer term point and figure indicators (at the time of this writing in February 2013) are all in unison, pointing up. This typically means pull-backs will be simply that… pull-backs; and should be considered opportunities to put more money to work. No matter whether the Dow reaches 14,000 or some other round number.

You need to know the short term point and figure indicators are very extended, quite over-bought. So we could go through a pull-back in the very near future. But keep in mind that longer term backdrop when things turn negative at some point. It’s a pull-back. Don’t get hung up on news the Dow reaches 14,000, or any other number. Follow the indicators instead!